Piper Jaffray Companies (NYSE: PJC) today announced its
financial results for the quarter ended June 30, 2015.
In the second quarter, we generated strong
performance as our businesses produced solid results, we made
important progress on growth initiatives and returned a significant
amount of capital through share repurchases.
Financial Highlights
- Adjusted net income(1) was $18.6
million, or $1.19 per diluted common share(1), in the second
quarter of 2015, compared to $20.5 million, or $1.25 per diluted
common share, in the second quarter of 2014, and $18.8 million, or
$1.14 per diluted common share, in the first quarter of 2015.
- Adjusted net revenues(1) were $163.9
million in the second quarter of 2015, compared to $166.7 million
and $155.7 million in the second quarter of 2014 and the first
quarter of 2015, respectively.
- Adjusted pre-tax operating margin(1)
was 17.8% in the second quarter of 2015, compared to 19.2% and
18.9% in the second quarter of 2014 and the first quarter of 2015,
respectively.
- Assets under management were $11.4
billion at June 30, 2015, compared to $12.6 billion in the
year-ago period and $11.4 billion at the end of the first quarter
of 2015.
- In the second quarter of 2015, we
repurchased $59.4 million, or approximately 1,200,000 shares of our
common stock, at an average price of $49.53 per share.
- Rolling 12 month return on average
common shareholders' equity decreased to 7.5% at June 30,
2015, compared to 9.2% at June 30, 2014. Our rolling 12 month
return on average tangible common shareholders' equity(2) decreased
to 10.8% at June 30, 2015, compared to 13.9% at June 30,
2014.
- Book value per share increased 8% from
June 30, 2014 to $56.79 a share at June 30, 2015.
Three Months Ended Percent Inc/(Dec)
Six Months Ended (Amounts in thousands,
June 30, Mar. 31, June 30, 2Q
'15 2Q '15 June 30, June 30,
Percent except per share data)
2015 2015
2014 vs. 1Q '15 vs. 2Q '14 2015
2014 Inc/(Dec) As Adjusted(1) Net
revenues
$ 163,879 $ 155,739 $ 166,698 5.2
%
(1.7 )%
$ 319,618 $ 328,195 (2.6 )% Net income
$ 18,634 $ 18,819 $ 20,494 (1.0 )% (9.1 )%
$
37,453 $ 40,529 (7.6 )% Earnings per diluted common share
$ 1.19 $ 1.14 $ 1.25 4.4
%
(4.8 )%
$ 2.33 $ 2.49 (6.4 )% Pre-tax operating
margin
17.8 % 18.9 % 19.2 %
18.4 % 19.3
%
U.S. GAAP Net revenues
$ 164,066 $
161,871 $ 170,031 1.4
%
(3.5 )%
$ 325,937 $ 338,164 (3.6 )% Net income
$ 16,999 $ 16,972 $ 18,213 0.2
%
(6.7 )%
$ 33,971 $ 35,961 (5.5 )% Earnings per
diluted common share
$ 1.08 $ 1.03 $ 1.11 4.9
%
(2.7 )%
$ 2.11 $ 2.21 (4.5
)%
Pre-tax operating margin
15.8 % 19.3 % 17.9 %
17.5 % 18.7 %
(1)
A non-U.S. GAAP ("non-GAAP") measure. For
a detailed explanation of the adjustments made to the corresponding
U.S. GAAP measures, see "Reconciliation of U.S. GAAP to Selected
Summary Financial Information." We believe that presenting our
results and measures on an adjusted basis in conjunction with U.S.
GAAP measures provides the most meaningful basis for comparison of
our operating results across periods.
(2)
A non-GAAP measure. See the "Additional
Shareholder Information" section for a detailed explanation of the
adjustment made to the corresponding U.S. GAAP measure. We believe
that the rolling 12 month return on average tangible common
shareholders' equity is a meaningful measure of our return on
tangible assets deployed in the business.
For the second quarter of 2015, on a U.S. GAAP basis, net
revenues were $164.1 million, and net income was $17.0 million, or
$1.08 per diluted common share.
“We continue to produce consistently strong results,” said
Andrew S. Duff, Chairman and Chief Executive Officer, "with our
public finance and advisory businesses leading the way this
quarter. Our steady performance over the past few years has
positioned us to take advantage of growth opportunities like the
major expansion into FIG and the acquisition of BMO Capital Markets
GKST we announced recently."
Second Quarter Results – Non-GAAP BasisThroughout the
Adjusted Consolidated Results and Business Segment Results sections
of this press release we present financial measures that are not
prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"). The non-GAAP financial measures include
adjustments to exclude (1) revenues and expenses related to
noncontrolling interests, (2) amortization of intangible assets
related to acquisitions and (3) compensation for
acquisition-related agreements. Management believes that presenting
results and measures on an adjusted basis in conjunction with U.S.
GAAP measures provides the most meaningful basis for comparison of
its operating results across periods. For a detailed explanation of
the adjustments made to the corresponding U.S. GAAP measures, see
"Reconciliation of U.S. GAAP to Selected Summary Financial
Information."
Adjusted Consolidated ResultsFor the second quarter of
2015, adjusted net revenues were $163.9 million, down 2% compared
to $166.7 million in the second quarter of 2014. Adjusted net
revenues increased 5% compared to the first quarter of 2015 due to
strong debt financing and advisory services revenues, partially
offset by investment losses.
For the second quarter of 2015, adjusted compensation and
benefits expenses were $102.7 million, up slightly compared to the
second quarter of 2014. Adjusted compensation and benefits expenses
increased 9% compared to the first quarter of 2015 due primarily to
higher revenues.
For the second quarter of 2015, adjusted compensation and
benefits expenses were 62.6% of adjusted net revenues, compared to
61.0% and 60.7% for the second quarter of 2014 and the first
quarter of 2015, respectively. The adjusted compensation ratio
increased compared to both the year-ago period and the sequential
quarter due to a change in our mix of business. The adjusted
compensation ratio was also higher compared to both periods due to
compensation expenses associated with significant hiring in our
Capital Markets segment as we build a financial institutions
group.
Adjusted non-compensation expenses were $32.0 million for the
second quarter of 2015, down 3% compared to the year-ago period and
up 1% compared to the first quarter of 2015.
Business Segment ResultsThe firm has two reportable
business segments: Capital Markets and Asset Management.
Consolidated net revenues and expenses are fully allocated to these
two segments.
Capital MarketsFor the quarter, Capital Markets generated
adjusted pre-tax operating income of $24.3 million, compared to
$23.1 million and $22.4 million in the second quarter of 2014 and
the first quarter of 2015, respectively.
Adjusted net revenues were $146.0 million, up 1% and 7% compared
to the year-ago period and the first quarter of 2015,
respectively.
- Equity financing revenues of $35.8
million decreased 19% and 2% compared to the second quarter of 2014
and the first quarter of 2015, respectively. Revenues were
unfavorable compared to the year-ago period due to fewer completed
transactions.
- Debt financing revenues were $30.1
million, up 49% and 39% compared to the year-ago period and the
first quarter of 2015, respectively, due to more completed
transactions.
- Advisory services revenues were $40.1
million, up 1% and 37% compared to the second quarter of 2014 and
the first quarter of 2015, respectively. The increase compared to
the sequential quarter was due to higher revenue per
transaction.
- Equity institutional brokerage revenues
of $20.4 million increased 11% and 8% compared to the year-ago
period and the first quarter of 2015, respectively, due to higher
client trading volumes.
- Fixed income institutional brokerage
revenues were $20.5 million, down 3% and 4% compared to the second
quarter of 2014 and the first quarter of 2015, respectively.
- Management and performance fees earned
from managing our alternative asset management funds were $0.6
million, compared to $1.4 million in both the year-ago period and
the sequential quarter, respectively. The decrease compared to both
periods was due to lower performance fees.
- Adjusted investment income, which
includes realized and unrealized gains and losses on our
investments in the merchant banking fund and the municipal bond
fund that we manage for third party investors, and other firm
investments, was not significant in the current quarter, compared
to $1.7 million in the year-ago period and $8.6 million in the
first quarter of 2015. We recorded higher gains on these
investments in both of the prior periods.
- Long-term financing expenses, which
primarily represent interest paid on the firm's variable rate
senior notes, were $1.6 million, down 9% compared to the second
quarter of 2014 and essentially flat with the first quarter of
2015.
- Adjusted operating expenses for the
second quarter of 2015 were $121.7 million, essentially flat
compared to the second quarter of 2014 and up 7% compared to the
first quarter of 2015. The increase compared to the sequential
quarter was due to higher compensation expenses.
- Adjusted segment pre-tax operating
margin was 16.7% compared to 15.9% in the year-ago period and 16.5%
in the first quarter of 2015.
Asset ManagementFor the quarter ended June 30, 2015,
Asset Management generated adjusted pre-tax operating income of
$4.9 million, down 45% and 31% compared to the second quarter of
2014 and the first quarter of 2015, respectively.
Net revenues were $17.9 million, down 19% and 9% compared to the
second quarter of 2014 and the first quarter of 2015, respectively.
The decrease compared to the year-ago period was due to lower
management fees from our value equity product offerings, partially
offset by increased management fees from our MLP product offerings.
Also, investment loss was $0.7 million for the current quarter,
compared with income of $1.1 million and $0.6 million in the second
quarter of 2014 and the first quarter of 2015, respectively.
- Adjusted operating expenses for the
current quarter were $13.0 million, essentially flat compared to
the year-ago period and up 3% compared to the first quarter of
2015.
- Adjusted segment pre-tax operating
margin was 27.3%, compared to 40.7% in the second quarter of 2014
and 35.8% in the first quarter of 2015. Adjusted segment pre-tax
operating margin declined relative to both periods due to lower net
revenues.
- Assets under management (AUM) were
$11.4 billion at the end of the second quarter of 2015, compared to
$12.6 billion in the year-ago period and $11.4 billion at the end
of the first quarter of 2015.
Other MattersIn the second quarter of 2015, we
repurchased $59.4 million, or approximately 1,200,000 shares of our
common stock, at an average price of $49.53 per share. We have $7.9
million remaining on our share repurchase authorization, which
expires on September 30, 2016.
Additional Shareholder Information
For the Quarter Ended June 30, 2015
Mar. 31, 2015 June 30, 2014 Full time
employees 1,100 1,030 999
Equity financings # of
transactions
27 35 33 Capital raised
$6.1 billion
$6.5 billion $9.2 billion
Negotiated tax-exempt issuances #
of transactions
155 99 112 Par value
$3.9 billion
$2.9 billion $2.4 billion
Mergers & acquisitions # of
transactions
14 15 16 Aggregate deal value
$3.5
billion $1.6 billion $3.7 billion
Asset Management AUM
$11.4 billion $11.4 billion $12.6 billion
Common
shareholders’ equity $789.6 million $831.0 million
$787.8 million
Number of common shares outstanding (in
thousands) 13,904 15,000 14,995
Rolling 12 month
return on average common shareholders’ equity * 7.5%
7.8% 9.2%
Rolling 12 month return on average tangible common
shareholders’ equity † 10.8% 11.2% 13.9%
Book value
per share $56.79 $55.40 $52.54
Tangible book value
per share ‡ $39.60 $39.35 $36.06 * Rolling
12 month return on average common shareholders' equity is computed
by dividing net income applicable to Piper Jaffray Companies' for
the last 12 months by average monthly common shareholders' equity.
† Rolling 12 month return on average tangible common
shareholders' equity is computed by dividing net income applicable
to Piper Jaffray Companies' for the last 12 months by average
monthly common shareholders' equity less average goodwill and
identifiable intangible assets. Management believes that the
rolling 12 month return on average tangible common shareholders'
equity is a meaningful measure of our return on tangible assets
deployed in the business. Average common shareholders’ equity is
the most directly comparable GAAP financial measure to average
tangible shareholders’ equity. The following is a reconciliation of
average common shareholders’ equity to average tangible common
shareholders’ equity: As of As of As of
(Amounts in thousands) June 30, 2015 Mar. 31, 2015 June 30, 2014
Average common shareholders’ equity $ 811,208 $ 803,670 $ 740,280
Deduct: average goodwill and identifiable intangible assets 242,824
244,646 249,096 Average tangible common
shareholders’ equity $ 568,384 $ 559,024 $ 491,184
‡ Tangible book value per share is computed by
dividing tangible common shareholders’ equity by common shares
outstanding. Tangible common shareholders’ equity equals total
common shareholders’ equity less goodwill and identifiable
intangible assets. Management believes that tangible book value per
share is a meaningful measure of the tangible assets deployed in
our business. Shareholders’ equity is the most directly comparable
GAAP financial measure to tangible shareholders’ equity. The
following is a reconciliation of shareholders’ equity to tangible
shareholders’ equity: As of As of As of
(Amounts in thousands) June 30, 2015 Mar. 31, 2015 June 30, 2014
Common shareholders’ equity $ 789,635 $ 830,951 $ 787,848 Deduct:
goodwill and identifiable intangible assets 238,990 240,763
247,172 Tangible common shareholders’ equity $
550,645 $ 590,188 $ 540,676
Conference Call
Andrew S. Duff, chairman and chief executive officer, and Debbra
L. Schoneman, chief financial officer, will hold a conference call
to review the financial results on Thur., July 23 at 9 a.m. ET (8
a.m. CT). The earnings release will be available on or after July
23 at the firm's Web site at www.piperjaffray.com. The call can be accessed via
webcast or by dialing (888)810-0209 or (706)902-1361
(international) and referencing reservation #77675515. Callers
should dial in at least 15 minutes prior to the call time. A replay
of the conference call will be available beginning at approximately
12 p.m. ET July 23 at the same Web address or by calling
(855)859-2056 and referencing reservation #77675515.
About Piper Jaffray
Piper Jaffray is an investment bank and asset management firm
serving clients in the U.S. and internationally. Proven advisory
teams combine deep industry, product and sector expertise with
ready access to capital. Founded in 1895, the firm is headquartered
in Minneapolis and has offices across the United States and in
London, Hong Kong and Zurich. www.piperjaffray.com
Cautionary Note Regarding Forward-Looking Statements
This press release and the conference call to discuss the
contents of this press release contain forward-looking statements.
Statements that are not historical or current facts, including
statements about beliefs and expectations, are forward-looking
statements and are subject to significant risks and uncertainties
that are difficult to predict. These forward-looking statements
cover, among other things, statements made about general economic
and market conditions (including the outlook for equity markets and
the interest rate environment), the environment and prospects for
corporate advisory transactions and capital markets (including our
performance in specific sectors), anticipated financial results
generally (including expectations regarding our non-compensation
expenses, compensation and benefits expense, compensation ratio,
revenue levels, operating margins, earnings per share, effective
tax rate, and return on equity), current deal pipelines (or
backlogs), the liquidity of fixed income markets and impact on our
related inventory, our strategic priorities (including growth in
public finance, asset management, and corporate advisory),
potential acquisitions or strategic hires, the expected benefits of
our acquisitions of River Branch Holdings, LLC and BMO Capital
Markets GKST, Inc., or other similar matters.
Forward-looking statements involve inherent risks and
uncertainties, both known and unknown, and important factors could
cause actual results to differ materially from those anticipated or
discussed in the forward-looking statements. These risks,
uncertainties and important factors include, but are not limited
to, the following:
- market and economic conditions or
developments may be unfavorable, including in specific sectors in
which we operate, and these conditions or developments, such as
market fluctuations or volatility, may adversely affect our
business, revenue levels and profitability;
- net revenues from capital markets and
corporate advisory engagements may vary materially depending on the
number, size, and timing of completed transactions, and completed
transactions do not generally provide for subsequent
engagements;
- the volume of anticipated investment
banking transactions as reflected in our deal pipelines (and the
net revenues we earn from such transactions) may differ from
expected results if there is a decline in macroeconomic conditions
or the financial markets, or if the terms of any transactions are
modified;
- interest rate volatility, especially if
the changes are rapid or severe, could negatively impact our fixed
income institutional business and the negative impact could be
exaggerated by reduced liquidity in the fixed income markets;
- strategic trading activities comprise a
meaningful portion of our fixed income institutional brokerage
revenue, and results from these activities may be volatile and vary
significantly, including the possibility of incurring losses, on a
quarterly and annual basis;
- potential acquisitions targets or
strategic hires may not be available on reasonable terms or at all,
and we may not be able to effectively integrate any business or
groups of employees we acquire or hire, and the expected benefits
of any acquisitions or strategic hires, including that of River
Branch Holdings, LLC and BMO Capital Markets GKST, Inc., may take
longer than anticipated to achieve and may not be achieved in their
entirety or at all;
- our stock price may fluctuate as a
result of several factors, including but not limited to, changes in
our revenues and operating results.
A further listing and description of these and other risks,
uncertainties and important factors can be found in the sections
titled “Risk Factors” in Part I, Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2014 and
“Management's Discussion and Analysis of Financial Condition and
Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the year ended December 31, 2014, and
updated in our subsequent reports filed with the SEC (available at
our Web site at www.piperjaffray.com
and at the SEC Web site at www.sec.gov).
Forward-looking statements speak only as of the date they are
made, and readers are cautioned not to place undue reliance on
them. We undertake no obligation to update them in light of new
information or future events.
© 2015 Piper Jaffray Companies, 800 Nicollet
Mall, Suite 1000, Minneapolis, Minnesota 55402-7020
Piper Jaffray Companies
Preliminary Results of Operations (U.S. GAAP –
Unaudited)
Three Months Ended Percent Inc/(Dec)
Six Months Ended June 30,
Mar. 31, June 30, 2Q '15 2Q
'15 June 30, June 30, Percent
(Amounts in thousands, except per share data)
2015
2015 2014 vs. 1Q '15 vs. 2Q '14
2015 2014 Inc/(Dec) Revenues:
Investment banking $ 106,069 $ 87,077 $ 103,813 21.8
%
2.2 % $ 193,146 $ 192,287 0.4
%
Institutional brokerage 36,661 36,036 34,528 1.7 6.2 72,697 78,562
(7.5 ) Asset management 19,257 20,522 22,266 (6.2 ) (13.5 ) 39,779
43,225 (8.0 ) Interest 11,422 12,205 12,448 (6.4 ) (8.2 ) 23,627
26,107 (9.5 ) Investment income/(loss) (3,299 ) 12,591 2,921
N/M N/M 9,292 9,689 (4.1 ) Total
revenues 170,110 168,431 175,976 1.0 (3.3 ) 338,541 349,870 (3.2 )
Interest expense 6,044 6,560 5,945 (7.9
) 1.7 12,604 11,706 7.7 Net
revenues 164,066 161,871 170,031 1.4
(3.5 ) 325,937 338,164 (3.6 )
Non-interest
expenses: Compensation and benefits 103,554 95,857 103,076 8.0
0.5 199,411 203,565 (2.0 ) Outside services 8,885 8,184 9,914 8.6
(10.4 ) 17,069 18,682 (8.6 ) Occupancy and equipment 6,983 6,783
7,061 2.9 (1.1 ) 13,766 13,839 (0.5 ) Communications 5,088 6,328
5,432 (19.6 ) (6.3 ) 11,416 11,387 0.3 Marketing and business
development 7,239 6,982 6,709 3.7 7.9 14,221 12,960 9.7 Trade
execution and clearance 1,977 1,997 1,788 (1.0 ) 10.6 3,974 3,622
9.7 Intangible asset amortization expense 1,773 1,773 2,318 — (23.5
) 3,546 4,636 (23.5 ) Other operating expenses 2,708 2,675
3,316 1.2 (18.3 ) 5,383 6,343
(15.1 ) Total non-interest expenses 138,207 130,579
139,614 5.8 (1.0 ) 268,786 275,034 (2.3
)
Income before income tax expense 25,859 31,292
30,417 (17.4 ) (15.0 ) 57,151 63,130 (9.5 ) Income tax
expense 9,542 9,490 10,049 0.5 (5.0 )
19,032 19,876 (4.2 )
Net income 16,317
21,802 20,368 (25.2 ) (19.9 ) 38,119 43,254 (11.9 ) Net
income/(loss) applicable to noncontrolling interests (682 ) 4,830
2,155 N/M N/M 4,148 7,293
(43.1 )
Net income applicable to Piper Jaffray Companies
(a) $ 16,999 $ 16,972 $ 18,213 0.2
%
(6.7 )% $ 33,971 $ 35,961 (5.5 )%
Net
income applicable to Piper Jaffray Companies’ common shareholders
(a) $ 15,699 $ 15,810 $ 16,717 (0.7 )%
(6.1 )% $ 31,513 $ 32,806 (3.9 )%
Earnings
per common share Basic $ 1.08 $ 1.03 $ 1.12 4.9
%
(3.6 )% $ 2.12 $ 2.22 (4.5 )% Diluted $ 1.08 $ 1.03 $ 1.11 4.9
%
(2.7 )% $ 2.11 $ 2.21 (4.5 )%
Weighted average number of
common shares outstanding Basic 14,487 15,294 14,958 (5.3 )%
(3.1 )% 14,888 14,786 0.7
%
Diluted 14,513 15,332 15,013 (5.3 )% (3.3 )% 14,920 14,836 0.6
%
(a)
Net income applicable to Piper Jaffray
Companies is the total net income earned by the Company. Piper
Jaffray Companies calculates earnings per common share using the
two-class method, which requires the allocation of consolidated net
income between common shareholders and participating security
holders, which in the case of Piper Jaffray Companies, represents
unvested restricted stock with dividend rights.
N/M — Not meaningful
Piper Jaffray Companies
Preliminary Segment Data (U.S. GAAP – Unaudited)
Three Months Ended Percent Inc/(Dec)
Six Months Ended June 30,
Mar. 31, June 30, 2Q '15 2Q
'15 June 30, June 30, Percent
(Dollars in thousands)
2015 2015 2014 vs.
1Q '15 vs. 2Q '14 2015 2014
Inc/(Dec) Capital Markets Investment banking
Financing Equities $ 35,755 $ 36,489 $ 44,058 (2.0 )% (18.8 )% $
72,244 $ 79,359 (9.0 )% Debt 30,098 21,738 20,174 38.5 49.2 51,836
33,713 53.8 Advisory services 40,139 29,266 39,695
37.2 1.1 69,405 79,423 (12.6 )
Total investment banking 105,992 87,493 103,927 21.1 2.0 193,485
192,495 0.5 Institutional sales and trading Equities 20,407
18,905 18,366 7.9 11.1 39,312 42,626 (7.8 ) Fixed income 20,482
21,217 21,085 (3.5 ) (2.9 ) 41,699
46,323 (10.0 ) Total institutional sales and trading 40,889
40,122 39,451 1.9 3.6 81,011 88,949 (8.9 ) Management and
performance fees 621 1,407 1,388 (55.9 ) (55.3 ) 2,028 3,125 (35.1
) Investment income 215 14,705 4,998 (98.5 ) (95.7 ) 14,920
15,376 (3.0 ) Long-term financing expenses (1,553 ) (1,560 )
(1,705 ) (0.4 ) (8.9 ) (3,113 ) (3,445 ) (9.6 ) Net revenues
146,164 142,167 148,059 2.8 (1.3 ) 288,331 296,500 (2.8 )
Operating expenses 123,687 116,203 124,691 6.4
(0.8 ) 239,890 245,621 (2.3 ) Segment
pre-tax operating income $ 22,477 $ 25,964 $ 23,368
(13.4 )% (3.8 )% $ 48,441 $ 50,879 (4.8 )%
Segment pre-tax operating margin 15.4 % 18.3 % 15.8 % 16.8 %
17.2 %
Asset Management Management and performance
fees Management fees $ 18,436 $ 19,107 $ 20,600 (3.5 )% (10.5 )% $
37,543 $ 39,736 (5.5 )% Performance fees 200 8 278
N/M (28.1 ) 208 364 (42.9 ) Total
management and performance fees 18,636 19,115 20,878 (2.5 ) (10.7 )
37,751 40,100 (5.9 ) Investment income/(loss) (734 ) 589
1,094 N/M N/M (145 ) 1,564 N/M
Net revenues 17,902 19,704 21,972 (9.1 ) (18.5 )
37,606 41,664 (9.7 ) Operating expenses 14,520 14,376
14,923 1.0 (2.7 ) 28,896 29,413
(1.8 ) Segment pre-tax operating income $ 3,382 $
5,328 $ 7,049 (36.5 )% (52.0 )% $ 8,710 $
12,251 (28.9 )% Segment pre-tax operating margin 18.9
% 27.0 % 32.1 % 23.2 % 29.4 %
Total Net revenues $
164,066 $ 161,871 $ 170,031 1.4
%
(3.5 )% $ 325,937 $ 338,164 (3.6 )% Operating expenses
138,207 130,579 139,614 5.8 (1.0 )
268,786 275,034 (2.3 ) Pre-tax operating
income $ 25,859 $ 31,292 $ 30,417 (17.4 )%
(15.0 )% $ 57,151 $ 63,130 (9.5 )% Pre-tax
operating margin 15.8 % 19.3 % 17.9 % 17.5 % 18.7 %
N/M — Not meaningful
Piper Jaffray Companies
Preliminary Selected Summary Financial Information (Non-GAAP
– Unaudited) (1)
Three Months Ended Percent Inc/(Dec)
Six Months Ended June 30,
Mar. 31, June 30, 2Q '15 2Q
'15 June 30, June 30, Percent
(Amounts in thousands, except per share data)
2015
2015 2014 vs. 1Q '15 vs. 2Q '14
2015 2014 Inc/(Dec) Revenues:
Investment banking $ 106,069 $ 87,077 $ 103,813 21.8
%
2.2
%
$ 193,146 $ 192,287 0.4
%
Institutional brokerage 36,661 36,036 34,528 1.7 6.2 72,697 78,562
(7.5 ) Asset management 19,257 20,522 22,266 (6.2 ) (13.5 ) 39,779
43,225 (8.0 ) Interest 8,114 9,245 9,451 (12.2 ) (14.1 ) 17,359
19,807 (12.4 ) Investment income/(loss) (1,151 ) 8,452 1,666
N/M N/M 7,301 4,247 71.9
Total revenues
168,950 161,332 171,724 4.7 (1.6 ) 330,282 338,128 (2.3 )
Interest expense 5,071 5,593 5,026 (9.3 ) 0.9
10,664 9,933 7.4 Adjusted net
revenues (2) $ 163,879 $ 155,739 $ 166,698 5.2
%
(1.7 )% $ 319,618 $ 328,195 (2.6 )%
Non-interest expenses: Adjusted compensation and benefits
(3) $ 102,650 $ 94,606 $ 101,660 8.5
%
1.0
%
$ 197,256 $ 200,860 (1.8 )% Ratio of adjusted
compensation and benefits to adjusted net revenues 62.6 % 60.7 %
61.0 % 61.7 % 61.2 % Adjusted non-compensation expenses (4)
$ 32,011 $ 31,647 $ 33,042 1.2
%
(3.1 )% $ 63,658 $ 64,157 (0.8 )% Ratio of adjusted
non-compensation expenses to adjusted net revenues 19.5 % 20.3 %
19.8 % 19.9 % 19.5 %
Adjusted income: Adjusted income
before adjusted income tax expense (5) $ 29,218 $ 29,486
$ 31,996 (0.9 )% (8.7 )% $ 58,704 $ 63,178
(7.1 )% Adjusted operating margin (6) 17.8 % 18.9 % 19.2 %
18.4 % 19.3 %
Adjusted income tax expense (7) 10,584
10,667 11,502 (0.8 ) (8.0 ) 21,251
22,649 (6.2 )
Adjusted net income (8) $ 18,634
$ 18,819 $ 20,494 (1.0 )% (9.1 )% $ 37,453
$ 40,529 (7.6 )% Effective tax rate (9) 36.2 % 36.2 %
35.9 % 36.2 % 35.8 %
Adjusted net income applicable to
Piper Jaffray Companies’ common shareholders (10) $ 17,209
$ 17,531 $ 18,811 (1.8 )% (8.5 )% $ 34,743
$ 36,973 (6.0 )%
Adjusted earnings per
diluted common share $ 1.19 $ 1.14 $ 1.25
4.4
%
(4.8 )% $ 2.33 $ 2.49 (6.4 )%
Weighted
average number of common shares outstanding Diluted 14,513
15,332 15,013 (5.3 )% (3.3 )% 14,920 14,836 0.6
%
This presentation includes non-GAAP measures. The non-GAAP
measures are not meant to be considered in isolation or as a
substitute for the corresponding U.S. GAAP measures, and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation
of the adjustments made to the corresponding U.S. GAAP measures,
see "Reconciliation of U.S. GAAP to Selected Summary Financial
Information."
N/M — Not meaningful
Piper Jaffray Companies
Preliminary Adjusted Segment Data (Non-GAAP –
Unaudited)
Three Months Ended Percent Inc/(Dec)
Six Months Ended June 30,
Mar. 31, June 30, 2Q '15 2Q
'15 June 30, June 30, Percent
(Dollars in thousands)
2015 2015 2014 vs.
1Q '15 vs. 2Q '14 2015 2014
Inc/(Dec) Capital Markets Investment banking
Financing Equities $ 35,755 $ 36,489 $ 44,058 (2.0 )% (18.8 )% $
72,244 $ 79,359 (9.0 )% Debt 30,098 21,738 20,174 38.5 49.2 51,836
33,713 53.8 Advisory services 40,139 29,266 39,695
37.2 1.1 69,405 79,423 (12.6 )
Total investment banking 105,992 87,493 103,927 21.1 2.0 193,485
192,495 0.5 Institutional sales and trading Equities 20,407
18,905 18,366 7.9 11.1 39,312 42,626 (7.8 ) Fixed income 20,482
21,217 21,085 (3.5 ) (2.9 ) 41,699
46,323 (10.0 ) Total institutional sales and trading 40,889
40,122 39,451 1.9 3.6 81,011 88,949 (8.9 ) Management and
performance fees 621 1,407 1,388 (55.9 ) (55.3 ) 2,028 3,125 (35.1
) Investment income 28 8,573 1,665 (99.7 ) (98.3 ) 8,601
5,407 59.1 Long-term financing expenses (1,553 ) (1,560 )
(1,705 ) (0.4 ) (8.9 ) (3,113 ) (3,445 ) (9.6 ) Adjusted net
revenues (2) 145,977 136,035 144,726 7.3 0.9 282,012 286,531 (1.6 )
Adjusted operating expenses (12) 121,651 113,601
121,675 7.1 — 235,252 239,396
(1.7 ) Adjusted segment pre-tax operating income (5)
$ 24,326 $ 22,434 $ 23,051 8.4
%
5.5 % $ 46,760 $ 47,135 (0.8 )% Adjusted
segment pre-tax operating margin (6) 16.7 % 16.5 % 15.9 % 16.6 %
16.5 %
Asset Management Management and performance
fees Management fees $ 18,436 $ 19,107 $ 20,600 (3.5 )% (10.5 )% $
37,543 $ 39,736 (5.5 )% Performance fees 200 8 278
N/M (28.1 ) 208 364 (42.9 ) Total
management and performance fees 18,636 19,115 20,878 (2.5 ) (10.7 )
37,751 40,100 (5.9 ) Investment income/(loss) (734 ) 589
1,094 N/M N/M (145 ) 1,564 N/M
Net revenues 17,902 19,704 21,972 (9.1 ) (18.5 )
37,606 41,664 (9.7 ) Adjusted operating expenses (13) 13,010
12,652 13,027 2.8 (0.1 ) 25,662
25,621 0.2 Adjusted segment pre-tax operating
income (13) $ 4,892 $ 7,052 $ 8,945 (30.6 )%
(45.3 )% $ 11,944 $ 16,043 (25.6 )% Adjusted
segment pre-tax operating margin (6) 27.3 % 35.8 % 40.7 % 31.8 %
38.5 %
Total Adjusted net revenues (2) $ 163,879 $
155,739 $ 166,698 5.2
%
(1.7 )% $ 319,618 $ 328,195 (2.6 )% Adjusted operating
expenses (12) 134,661 126,253 134,702 6.7
— 260,914 265,017 (1.5 )
Adjusted pre-tax operating income (5) $ 29,218 $ 29,486
$ 31,996 (0.9 )% (8.7 )% $ 58,704 $ 63,178
(7.1 )% Adjusted pre-tax operating margin (6) 17.8 %
18.9 % 19.2 % 18.4 % 19.3 %
This presentation includes non-GAAP measures. The non-GAAP
measures are not meant to be considered in isolation or as a
substitute for the corresponding U.S. GAAP measures, and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation
of the adjustments made to the corresponding U.S. GAAP measures,
see "Reconciliation of U.S. GAAP to Selected Summary Financial
Information."
N/M — Not meaningful
Piper Jaffray Companies
Reconciliation of U.S. GAAP to Selected Summary Financial
Information (1) (Unaudited)
Three Months Ended Six Months Ended
June 30, Mar. 31, June 30,
June 30, June 30, (Amounts in thousands,
except per share data)
2015 2015 2014
2015 2014 Net revenues: Net revenues – U.S.
GAAP basis $ 164,066 $ 161,871 $ 170,031 $ 325,937 $ 338,164
Adjustments: Revenue related to noncontrolling interests (11) (187
) (6,132 ) (3,333 ) (6,319 ) (9,969 ) Adjusted net revenues $
163,879 $ 155,739 $ 166,698 $ 319,618 $
328,195
Compensation and benefits:
Compensation and benefits – U.S. GAAP basis $ 103,554 $ 95,857 $
103,076 $ 199,411 $ 203,565 Adjustments: Compensation from
acquisition-related agreements (904 ) (1,251 ) (1,416 ) (2,155 )
(2,705 ) Adjusted compensation and benefits $ 102,650 $
94,606 $ 101,660 $ 197,256 $ 200,860
Non-compensation expenses: Non-compensation expenses
– U.S. GAAP basis $ 34,653 $ 34,722 $ 36,538 $ 69,375 $ 71,469
Adjustments: Non-compensation expenses related to noncontrolling
interests (11) (869 ) (1,302 ) (1,178 ) (2,171 ) (2,676 )
Amortization of intangible assets related to acquisitions (1,773 )
(1,773 ) (2,318 ) (3,546 ) (4,636 ) Adjusted non-compensation
expenses $ 32,011 $ 31,647 $ 33,042 $ 63,658
$ 64,157
Income before income tax
expense: Income before income tax expense – U.S. GAAP basis $
25,859 $ 31,292 $ 30,417 $ 57,151 $ 63,130 Adjustments: Revenue
related to noncontrolling interests (11) (187 ) (6,132 ) (3,333 )
(6,319 ) (9,969 ) Expenses related to noncontrolling interests (11)
869 1,302 1,178 2,171 2,676 Compensation from acquisition-related
agreements 904 1,251 1,416 2,155 2,705 Amortization of intangible
assets related to acquisitions 1,773 1,773 2,318
3,546 4,636 Adjusted income before adjusted
income tax expense $ 29,218 $ 29,486 $ 31,996
$ 58,704 $ 63,178
Income tax expense:
Income tax expense – U.S. GAAP basis $ 9,542 $ 9,490 $ 10,049 $
19,032 $ 19,876 Tax effect of adjustments: Compensation from
acquisition-related agreements 352 487 551 839 1,052 Amortization
of intangible assets related to acquisitions 690 690
902 1,380 1,721 Adjusted income tax expense $
10,584 $ 10,667 $ 11,502 $ 21,251 $
22,649
Net income applicable to Piper Jaffray
Companies: Net income applicable to Piper Jaffray Companies –
U.S. GAAP basis $ 16,999 $ 16,972 $ 18,213 $ 33,971 $ 35,961
Adjustments: Compensation from acquisition-related agreements 552
764 865 1,316 1,653 Amortization of intangible assets related to
acquisitions 1,083 1,083 1,416 2,166
2,915 Adjusted net income $ 18,634 $ 18,819 $
20,494 $ 37,453 $ 40,529
Net income
applicable to Piper Jaffray Companies' common shareholders: Net
income applicable to Piper Jaffray Companies' common stockholders –
U.S. GAAP basis $ 15,699 $ 15,810 $ 16,717 $ 31,513 $ 32,806
Adjustments: Compensation from acquisition-related agreements 510
712 794 1,221 1,508 Amortization of intangible assets related to
acquisitions 1,000 1,009 1,300 2,009
2,659 Adjusted net income applicable to Piper Jaffray
Companies' common stockholders $ 17,209 $ 17,531 $
18,811 $ 34,743 $ 36,973
Earnings
per diluted common share: Earnings per diluted common share –
U.S. GAAP basis $ 1.08 $ 1.03 $ 1.11 $ 2.11 $ 2.21 Adjustments:
Compensation from acquisition-related agreements 0.04 0.05 0.05
0.08 0.10 Amortization of intangible assets related to acquisitions
0.07 0.07 0.09 0.13 0.18
Adjusted earnings per diluted common share $ 1.19 $ 1.14
$ 1.25 $ 2.33 $ 2.49
This presentation includes non-GAAP measures. The non-GAAP
measures are not meant to be considered in isolation or as a
substitute for the corresponding U.S. GAAP measures, and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP.
Piper Jaffray Companies
Notes to Non-GAAP Financial Schedules
(1) Selected Summary Financial Information are non-GAAP
measures. Management believes that presenting results and measures
on an adjusted basis in conjunction with U.S. GAAP measures
provides the most meaningful basis for comparison of its operating
results across periods. (2) A non-GAAP measure which
excludes revenues related to noncontrolling interests (see (11)
below). (3) A non-GAAP measure which excludes compensation
expense from acquisition-related agreements. (4) A non-GAAP
measure which excludes (a) non-compensation expenses related to
noncontrolling interests (see (11) below) and (b) amortization of
intangible assets related to acquisitions. (5) A non-GAAP
measure which excludes (a) revenues and expenses related to
noncontrolling interests (see (11) below), (b) compensation from
acquisition-related agreements and (c) amortization of intangible
assets related to acquisitions. (6) A non-GAAP measure which
represents adjusted income before adjusted income tax expense as a
percentage of adjusted net revenues. (7) A non-GAAP measure
which excludes the income tax benefit from (a) compensation from
acquisition-related agreements and (b) amortization of intangible
assets related to acquisitions. (8) A non-GAAP measure which
represents net income earned by the Company excluding (a)
compensation expense from acquisition-related agreements, (b)
amortization of intangible assets related to acquisitions and (c)
the income tax expense/(benefit) allocated to the adjustments.
(9) Effective tax rate is a non-GAAP measure which is
computed based on a quotient, the numerator of which is adjusted
income tax expense and the denominator of which is adjusted income
before adjusted income tax expense. (10) Piper Jaffray
Companies calculates earnings per common share using the two-class
method, which requires the allocation of consolidated adjusted net
income between common shareholders and participating security
holders, which in the case of Piper Jaffray Companies, represents
unvested stock with dividend rights. (11) Noncontrolling
interests include revenue and expenses from consolidated
alternative asset management entities that are not attributable,
either directly or indirectly, to Piper Jaffray Companies.
(12) A non-GAAP measure which excludes (a) expenses related to
noncontrolling interests (see (11) above), (b) compensation from
acquisition-related agreements and (c) amortization of intangible
assets related to acquisitions. (13) A non-GAAP measure
which excludes (a) compensation from acquisition-related agreements
and (b) amortization of intangible assets related to acquisitions.
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version on businesswire.com: http://www.businesswire.com/news/home/20150723005228/en/
Piper Jaffray CompaniesInvestor Relations
ContactTom Smith, 612-303-6336
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